Suppose you consider investing $10,000 in a load fund from which a fee of 3 percent is deducted and you expect the fund to earn 12 percent over the next year. Alternatively, you could invest in a no-load fund that is expected to earn 10 percent and which takes a 0 percent redemption fee. Which is better and by how much?

Question

Quizplus · Accepted Answer

For the load fund, after the 3% fee on $10,000, you're left with $9,700. A 12% return on that is $1,164, totaling $10,864. For the no-load fund, a 10% return on $10,000 is $1,000, totaling $11,000. The no-load fund is better by $136 ($11,000 - $10,864).

Suppose You Consider Investing $10,000 in a Load Fund from Which